Why Amazon is selling its Fire TV on installment plans
Payment in installments is most often associated with products sold on infomercials or home shopping channels. Amazon (NASDAQ: AMZN) took a page from a book usually reserved for products like the NuWave Oven or the Little Giant Ladder and began offering their new Fire TV set-top box for five (presumably easy) payments of $ 19.80 plus tax.
The financing is offered without interest and without a credit check. The only catch is that customers must have an active Amazon for at least two years associated with a valid credit card. There is a limit of one device for the customer.
The move copies a similar promotion Amazon launched for its high-end Kindle Fire HDX tablet that allows people to pay in quarterly installments.
Amazon has a vested interest in making it as easy as possible for its customers to purchase Fire TV – the device not only makes it very easy to purchase TV and film content through Amazon, but it also makes it easier to buy. use of the company’s Amazon Prime. Video streaming video service. If a customer owns a Fire TV but doesn’t pay for Prime, they’ll constantly see the free video opportunities they’re missing out on by not spending $ 99 on the service (which also includes two-day free shipping over millions of dollars). articles). Every Fire TV sold by Amazon represents an opportunity to earn more money with its customers.
The company is hardly at risk with the offer – if a customer stops paying, Amazon could kick their device off the network, preventing it from delivering more content.
Installment plan may be a shot at Google, Roku
Two of Fire’s main competitors are Google (NASDAQ: GOOG) Chromecast for $ 35 and Roku’s Streaming Stick, which costs $ 49.99. Neither device offers as much as Fire TV (which doubles as a console-lite gaming platform), but both are very economical. Offering Fire on a phased basis might be enough to sway an Amazon loyalist who wants a Fire but is tempted to go for a cheaper choice.
There are many ways that fire helps Amazon make money
Amazon – like Roku, Google, Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Sony (NYSE: SNE), and others trying to take control of the salon, it’s not about selling the device, but what customers buy with it later. With Fire, Amazon can make money selling content like movies and TV shows, as well as selling apps and subscriptions to paid content services like WWE Network (which is not yet on Fire TV but has been announced as coming soon to the device).
If you order an Amazon Fire TV for yourself, it comes pre-installed with your Amazon account information. There is no configuration. It knows who you are and already has your credit card information (although a password must be entered to make purchases). Amazon has simplified the buying process, so renting a movie or even buying one doesn’t feel any different from watching free content. Just like the way Starbucks (NASDAQ: SBUX) made payment with its weird app like you don’t really spend any money, Amazon made their payment system so easy that once a customer has a fire, the amount they will spend with Amazon is expected to increase .
According to figures released by The Digital Entertainment Group, a consortium of Hollywood studios and electronics manufacturers, in January digital sales of films and TV shows rose 47% to $ 1.2 billion, while subscription streaming spending rose 32% to $ 3.2 billion. However, the overall rental market was $ 18.2 billion in 2013 and those dollars are likely to go mostly digital in the future.
It’s a big market that will grow and Amazon must do everything in its power to gain a foothold.
The market is maturing quickly
Almost two-thirds (62%) of TV content viewers now own a Smart TV or can stream content to their TV through another device, Horowitz Associates reported in its annual report. State of Cable and Digital Media study. While some of these people will switch devices, many will stick around or just don’t want to have to deal with the outlets and wires associated with switching streaming devices. Amazon needs to install Fire TV in the living rooms of as many customers as possible, otherwise it risks being left out of a lucrative market.
The installment payment offer is virtually risk-free and is expected to attract more Fire TV users (even if users want to spread the expense of $ 99 over five months). It’s also a tactic Amazon can use that its competitors can’t use so easily because the company already has a sales relationship with its customers. The installment offer is unlikely to result in a significant increase in sales of Fire TV. But with so many companies trying to take over shows, every little bit helps, and there’s no reason Amazon shouldn’t try out some creative selling ideas … even if those ideas are. most commonly associated with the Ronco Showtime Standard Rotisserie Chicken Cooker.
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